(Q,R) inventory policy with supplier disruptions

Question

I am trying to understand the (Q,R) inventory policy with a type 1 service level and demand and lead time modelled as normal distributions. As far as I have understood, the assumption is that the quantity Q that we order is completely delivered when the order arrives, i.e., no allowance is made for defective products or disruptions from the supplier's side. The policy inherently assumes that an order can be placed whenever the reorder point is reached and a quantity Q will be delivered after a certain lead time.

Are there models or case studies for calculating safety stock that take into account supplier-induced disruptions such as defective batches or probability of failure of manufacturing equipment?

Answer 1

Yes, there are such models. On (Q,R) specifically, see Gupta (1996), Parlar (1997), Mohebbi (2003), and others.

There are many papers on other inventory models (not necessarily (Q,R)) under disruptions. My students and I wrote a literature review paper on these and other supply chain models with disruptions; see Snyder, et al. (2016).

Note that these "disruption" models are different from stochastic lead times, which you mention in your question. But I think this is what your question is asking for.